Regulation - The key issue for investors in the TMT sector

European Commission to publish its Digital single Market strategy on 6 May

Telecom, Media & Technology (TMT)

April 29, 2015

Regulation is a key consideration for those working with and investing in the Telecom, Media and Technology (TMT) sector, according to research by business advisory firm FTI Consulting. Based on a survey of 143 senior executives and advisors working within the TMT sector, the research identifies a range of insights that will be of interest to regulators, corporates and advisers alike.

On 6th May the European Commission will publish its long awaited Digital single Market strategy aimed at breaking down what it sees as barriers blocking “the free flow of online services and entertainment across national borders”. It adds: “Creating a connected digital single market is one of the ten priorities from the President-elect Jean-Claude Juncker. Its completion could generate up to EUR 250 billion of additional growth in Europe in the course of the mandate of the new Commission (2014-2019).”

Regulatory approval of mergers within the sector is a focal point of this balancing of competition and investment. “Paying careful attention to the ‘mood music’ coming from the European Commission and other national regulators is more important than ever,” says Hugh Kelly, Managing Director, Economic and Financial Consulting at FTI Consulting.

Overwhelmingly those who work both in and with the TMT sector believe that regulators tend to be behind the curve, reacting to events rather than shaping them. Nearly two thirds (62%) believe that regulators are “aware of issues but have a ‘wait and see’ approach”, whilst according to nearly a third (32%) regulators “are aware of issues, and [are] starting to take steps to address them.”

“Our research suggests that, although those working in the TMT sector and their advisors certainly don’t want to see excessive or intrusive regulation, they would find it useful for the regulators to be more transparent as to their frameworks for determining what may or may not be acceptable to them. There is also a clear incentive for investors to engage more closely with the regulatory community, and to understand the objectives, frameworks and remedies that may apply to a given transaction,” says Neil Clements, Managing Director, Economic and Financial Consulting at FTI Consulting.